EDITORIAL
The Crisis of International Climate Policy
Negotiations over the future of an international climate treaty remain as deadlocked as ever. Predictably, the latest round of talks at the Group of Eight (G8) summit in L’Aquila, Italy, was unable to reconcile conflicting positions and incompatible demands on CO2 emissions and climate billions that divide the world’s industrialized and emerging nations.
The non-committal outcome of the climate talks by the 17 world leaders of the Major Economies Forum (MEF) was as expected. By prolonging the global stalemate, however, the deadlock is beginning to solidify. It now looks likely to become a permanent feature of international climate diplomacy.
Thus, as we get closer to the Copenhagen conference in December, the chances of a global treaty are fading. The probability of a Kyoto-style treaty with legally binding emissions targets is close to zero as the gap between the political stance of the developed and the developing nations has been growing ever wider.
Of course, the Copenhagen climate meeting is likely to produce an agreement — just like the Major Economies Forum cobbled one together in L’Aquila. It will, most likely, comprise of fine words and lofty promises, including the pledge that any future warming — should warming commence again at some point in the future — will be limited to no more than a moderate rise of 2C. And as always with climate conferences of this nature, the Copenhagen agreement will be hailed as a historic breakthrough in the fight to save the planet.
The G8 summit provided a good example of this traditional form of celebration. Its political promises, however, are often not worth the paper on which they are printed. The Russian government openly acknowledged this cliché when it distanced itself from the agreed G8 target of reducing CO2 by 80% in 2050. The economic advisor of Russian President Dmitry Medvedev declared bluntly that Russia was not prepared to sacrifice its economic growth for the purpose of CO2 reductions. Canada also said it would not hit the target.
Russia’s provocative U-turn signalled clearly that G8 pronouncements are immaterial and should not be taken too seriously. In reality, Moscow has no intention whatsoever to cut its emissions in the near future. Quite the opposite. Just over a month ago, the Russian President announced that his country intended to increase CO2 emissions by 30% by 2020. No wonder that G8 states find it impossible to agree on a credible, short-term emissions target as the developing world is demanding.
No wonder then that India and China remain opposed to any target setting. Neither can afford to sign up to mandatory emissions cuts, in whatever form or shape. Both countries are in the midst of economic and energy booms that will determine much of the 21st century. Both countries have categorically ruled out any mandatory emissions cuts, thereby ensuring that the diplomatic tug of war will continue for many years to come.
Even if they significantly increased their energy efficiency and were able to introduce an extensive assortment of low-carbon technologies (which is in the range of the possible), it is still expected that China’s and India’s CO2 emissions will nearly double over the next three decades.
By 2050, the combined population of China and India will have grown to a staggering three billion people. By then, most Chinese and Indians will have adopted an urban lifestyle, with cars, air conditioning, refrigerators, televisions and computers. This rate of population and economic growth together with the most extraordinary rise in energy demand makes any hope of medium-term emission reductions redundant.
All Western efforts to coerce these emerging countries into a legally binding climate treaty are prone to failure because the nations whose emissions count most — China and India —will continue to reject, categorically, any mandatory caps on their rapidly rising emissions. To counter Western pressure, India and China (in close partnership with other emerging nations) have raised their demands to such levels that they are effectively impossible to accept. They have told their Western counterparts that unless the G8 signs up to cut emissions by at least 40% by 2020, they would not commit to any emissions targets.
In addition, they are calling for new funding commitments from developed countries to spend up to 1% of their GDP on climate mitigation and adaptation — amounting to up to $200-billion per year. It is hard to see that the West, battered by the worst economic crisis since the Second World War, would ever agree to such a wealth transfer to its chief competitors — even in good times.
In short, the battle over global warming and low-carbon policies will not be decided over scientific issues. It will be determined by governments and law-makers on the basis of hard-nosed national and economic interests. As the global economic crisis deepens and energy-intensive industries are threatened by costly climate policies, international efforts to come to a global agreement remain as deadlocked as ever. This is where the green utopia for a low-carbon transition in the near future is likely to crash into the buffers.
The global economic crisis has rendered costly climate policies untenable. It has become hugely unpopular among voters who are increasingly hostile to green taxes. The intriguing fact that the global warming trend of the late 20th century appears to have come to a halt has led to growing public scepticism about claims of impending climate catastrophe.
Carbon taxes and cap-and-trade schemes have turned into considerable liabilities for political parties and governments alike. A climate revolt among Eastern and central European countries has forced the EU to renounce its unilateral Kyoto-strategy. President Obama’s administration is struggling to push its cap-and-trade bill through the US Senate because senators of his own party, the Blue Dog Democrats, are opposed to proposals they fear as being too costly and too risky.
Developing nations are demanding financial support to the tune of hundreds of billions of dollars (per year) in return for their support of a post-Kyoto climate treaty. In view of the astronomical demands made by China, India and Africa, Western governments and their voters are increasingly reluctant to agree to injurious obligations that risk weakening their economic competitiveness even further.
Perhaps the most critical factor for the growing scepticism in Europe is the vanishing strength of Europe’s centre-left and green parties, whose members were once among the most forceful climate alarmists. Labour and green parties throughout Europe have lost much of their popularity and support. Today, few have remained in positions of power.
In the UK, household energy bills are set to rise by more than £200 a year under the British Government’s low-carbon strategy. Meeting Britain’s targets for cutting emissions is likely to push another 1.7 million households into fuel poverty, pushing the overall number of fuel poverty household to nearly seven million.
The principles of fairness, technological progress and economic growth used to stand at the heart of social democratic governments. Advancing the interests of poor and disadvantaged members of society was essential to the popular appeal of social democratic and Labour parties. The centre-left have substituted these ideals for an environmental programme in which the rhetoric of saving the planet has taken priority over the principle of liberating the most underprivileged and disadvantaged from poverty and hardship today.
In effect, green taxes and climate policies are gradually pricing the working and lower-middle classes out of their comfort zone. Centre-left parties may sincerely believe that their utopian low-carbon plans will save the planet. But in the process they are destroying the very foundations of their political support and movement.
The abject failure of international climate policies to dent the trajectory of CO2 emissions together with the economic damage caused by expensive climate policies has led to a political backlash in many western countries. It would appear that after years of inflamed global warming rhetoric, we are beginning to see a period of political cooling and sobering-up, where national interests and economic priorities are overriding green beliefs and utopian plans.
What is more, the world and the balance of global power has been shifting quite dramatically since the 1980s and 1990s. At that time, the West, its green movement and the global warming hype were at their peak. Today, neither the West, nor the green movement, nor global warming hysteria play the dominant role they once occupied in the Western world. In this respect, the British obsession remains an exception, even in the European context, an exception that is unlikely to survive the deepening recession.
And yet, it is a remarkable irony of history that today, just when the leading voices of the radical student movements of the 1960s have managed to occupy governmental power in most western nations, their political and international clout is on the wane. The weakening of global warming anxiety among the general public and the marked decline of Western influence and authority on the international stage is a clear manifestation of what I would call a green slump.
To see how the political climate has changed in recent years, a look at the changes in EU politics is rather instructive. There has been a major transformation of the EU’s political landscape in the last 18 months. There can be little doubt about it: The deepening economic crisis has demoted green policies nearer to the bottom of the political agenda. Saving the economy and creating jobs take priority now. As a result, the EU’s climate policy has been shifting dramatically while it faces a growing number of major problems. Four key stumbling blocks stand out above all:
The EU’s unilateral emissions targets as mandated by the Kyoto Protocol has placed a heavy burden on European industries and national economies. Kyoto has undermined the EU’s international competitiveness.
In June, Jaroslaw Grzesik, deputy head of energy at Solidarnosc, warned that 800,000 jobs across Europe are set to be eliminated as a direct result of the adoption of EU climate change legislation. He said that Poland, Bulgaria, Romania, Slovakia and the Czech Republic would suffer most because of their reliance on coal for electricity production. “But Germany, the UK and Scandinavia will also suffer,” he told a conference in Brussels.
The trade unionist criticised the widely held believe that the expected job losses will be offset by state-funded developments of so-called green sector. According to the estimates by Solidarnosc, the 800,000 job losses due to the EU climate package are likely to be compensated by just over 200,000 new jobs.
In Europe, the fight against global warming was originally conceived by centre-left strategists as a political instrument that could bind the EU closer together. In an attempt to counter widespread public opposition to the EU, the British government in particular tried to re-brand the EU as the “Environmental Union”.
Two years ago, David Miliband, the UK’s former environment secretary, told an environmental conference in Brussels that, I quote, “the European Union must become the Environmental Union. It is the issue that can best reconnect Europe with its citizens and rebuild trust in the European institutions.”
Labour strategists were convinced that the fight against climate change would provide the EU with new legitimacy and a sense of purpose. Today, very little of this naive PR campaign remains discernable. Instead, EU climate policy has turned into one of the most divisive issues within the European Union. Rather than fostering cohesion, climate policy issues are beginning to undermine the very fabric of the EU.
In fact, when it comes to climate policy, the EU today is split deeper than perhaps on most other issues: It is split between East European member states increasingly opposed to unilateral targets and mandates - and West European states still dominated by the green philosophies of the 1960s radicals now in charge of environmental ministries throughout much of Western Europe.
It is also split between centre-right governments who are becoming increasingly sceptical and concerned about the economic burden of unilateral targets and obligations and the few remaining centre-left governments still advancing green politics of unilateral action. And it is split between member states with a strong manufacturing base alarmed about the destructive consequences of Kyoto-style mandates on their heavy industries - and member states, such as Britain, promoting the de-industrialisation of heavy industry.
It is exactly because the Kyoto Protocol is having such a dramatic impact on international trade relations, energy prices and the competitiveness of European industries, that climate policy is no longer in the hands of environment ministers.
For the last year and a half, environment ministers have been essentially stripped of their power to decide EU climate policies. Instead, control and decision-making has been fully seized by EU prime ministers and heads of state who are solely guided by national interests rather than by their green ministers and their climate advisors.
It is too early to say whether the EU’s climate package will survive in its current form. One thing, however, is quite certain: There is now a developing consensus within EU governments that its unilateral guiding principle will have to be abandoned if Europe does not wish to damage its struggling industries even further.
The EU’s Emissions Trading Scheme faces a serious crisis of credibility as the carbon price has collapsed for the second time in as many years and is unlikely to recover any time soon. As a result, ETS in both New Zealand and Australia are facing significant obstacles as political opposition to the establishment of ETS has hardened in both countries.
Finally, the EU faces isolation over its international climate strategy. The chances of breaking the deadlock over a post-Kyoto global climate treaty remain exceedingly slim as both China and India have categorically rejected Europe’s demands for binding emissions cuts. The EU’s attempts to compel the new U.S. administration to adopt similarly stringent medium-term emissions targets (for 2020) have been rebuffed.
Back in 2008, the EU’s environmental bureaucracy intended to ‘set an example’ by committing the Europe Union to a 20% reduction in its emissions compared to 1990 levels by 2020. At the EU summit last December, however, the original climate package was rejected outright. It was only pushed through after it had been diluted beyond recognition. Instead of commitments to cut CO2 emissions by 20% below 1990 levels by 2020, the actual reductions might be as trivial as 4% - if all exemptions are factored in.
In many ways, this watered-down climate package epitomizes the radical change of priorities and the end of what I would call the ‘green age’ of European politics. It is likely to lead eventually to the complete abandonment of the unilateral climate agenda that has shaped Europe’s green philosophy for nearly 20 years.
Many Western countries are experiencing a political backlash over their costly climate and renewable energy schemes. Tens of billions of dollars and euros of taxpayers’ money are being pumped into green projects that depend on endless government handouts. Above all, Europe’s politicians have recognized that climate taxes have turned into political liabilities that threaten to undermine not only economic stability but also their chances of re-election.
The really seismic shift in Europe, however, is the emergence of a strong group of rebellious countries who are against the EU’s current climate strategy. In public, these Eastern European governments claim they want a little compromise here and there. In reality, they are sceptical about the whole green agenda. They see current climate policies as serious trouble, both politically and economically.
Many ministers and decision makers in the EU have become increasingly conscious of the fact that its unilateral climate policy has produced much pain but little gain. Undaunted, UK government officials and green campaigners have urged the EU to “set an example to the rest of the world” and maintain its climate change goals regardless of economic costs. It is doubtful that EU leaders will listen to British officials on green issues.
Faced with growing popular resentment and opposition by key industry bodies, the EU has basically relinquished its unilateral Kyoto-policy over the last couple of years. Instead, the EU has now fully embraced George W Bush’s stance, in another irony of
history, demanding that developing countries such as India and China take on legally binding emissions reduction targets.
Officials in the US administration and the EU are threatening China and India with trade sanctions if they don’t accept legally binding emissions targets. Given the enormous energy demand both countries face in the next 30-40 years, it is extremely unlikely that they will ever accept mandatory emissions cuts any time soon.
A green border tax would protect US industries from cheaper foreign imports, like those from China and India, that have no mandatory, or less stringent emissions standards. Rejecting the proposed carbon tax as an attempt to impose protectionist tariffs, Chinese government officials warned that such a border tax would result in a trade war.
To counter Western pressure, China, India and the G77 nations are calling for funding commitments from developed countries. They have called on the West to spend somewhere between 0.5% to 1% of their GDP on climate change adaptation and green technology transfer – amounting to up to $300 billion per year. It is hard to see how the West would ever agree to such an astronomical wealth transfer.
Not surprisingly, developed nations have so far failed to agree on how to support poorer nations to fund the fight against climate change. EU ministers agreed that it would take 175 billion euros per year in 2020 to coax China and India into a global deal - a sum which is actually bigger than the entire EU budget. Nobody knows how this astronomical amount of money can be raised or who is willing to pay for this massive wealth transfer.
Because the EU wants emerging nations to commit to legally binding emissions targets, climate funding will be the main battle ground at the Copenhagen meeting. However, coming up with the enormous funds for developing nations is proving elusive and would be unrealistic even in good times. This strategy puts Europe and the US firmly in a snare of their own making.
All efforts to agree a global climate treaty are likely to fail, because the developing nations whose emissions count most, cannot afford to accept emissions cuts which would threaten to undermine economic and political stability. Developing nations, on the other hand, insist that the rich world unilaterally commit to stringent and legally binding CO2 emissions cuts at home. At the same time, they also demand massive wealth transfers from the West in the form of ‘clean’ technologies and financial funds for adaptation and energy initiatives.
Current climate policies are likely to turn into a lose-lose situation for Europe and the U.S. – both in terms of economic and political liabilities. Why? Because unless the West is prepared to transfer $200 billion or more in cap-and-trade revenues to the developing world –per year -, neither China nor India will agree to any future climate treaty. No matter what unilateral climate targets the U.S. Senate is ready to approve, the developing world will never give up on its demand for recompense, hard cash and free technology. Why? Because Western governments, by hyping up a global warming frenzy, have fully accepted their historical culpability and the “carbon debt” they believe they owe the rest of the world.
As a result of promoting environmental alarmism, Western governments find themselves trapped in a perilous, yet largely self-constructed snare. As long as climate
change is elevated as the principal liability of industrial countries, as long as Western CO2 emissions are blamed for exacerbating natural disasters, death and destruction around the globe, green pressure groups and officials from the developing world will continue to insist that the West is liable to recompense its exorbitant carbon debt by way of wealth transfer and financial compensation.
Yet this is unlikely to happen. Attempts to punish developing countries by introducing carbon tariffs would only trigger more resentment and would invite ruinous trade wars. Ultimately, there is now a growing risk that the whole globalwarming scare is creating more anti-Western hostility and further loss of economic clout and political influence on the international stage.
In view of what increasingly looks like an unbridgeable stalemate and after years of inflamed global warming alarm, we are beginning to see a period of sobering-up, where national interests and economic priorities are overriding environmental concerns and utopian proposals.
It seems reasonable to conclude that the diplomatic impasse cannot be overcome in Copenhagen or, indeed, anytime soon. What is needed in these circumstances is a calm deceleration strategy that would cool future climate negotiations and take the wind out of the sails of green campaigners. Such a deliberate slow-down could help to lower the political temperature and turn negotiations into routine events, thereby shedding much of their media hype and agitation. In the run-up to Copenhagen, it will be crucial for governments around the world to come up with fresh approaches and ideas that can lower expectations and manage to direct the permanent stalemate for many years to come.
Benny Peiser